Polish Your Merchandising Skills

The other item is moving 275 units, garnering $11,000 in net sales and is contributing $1,050 (10 percent). If your overhead costs are about 25 percent of sales, this item won’t be contributing enough to even cover overhead.

To get this item to contribute as little as 25 percent, you’d need sales of 425 units, or $17,000. That equals a 155-percent increase in response to that item and an additional contribution of $3,300. In short, you must increase response to this item by 155 percent in order for it to pay for its space in the catalog and contribute to your overhead—a mighty task indeed.